IDB Development Corp. shares and bonds surged Sunday after the board approved an investment proposal by Argentine businessman Eduardo Elsztain that also made him sole chairman of the company.
The Tel Aviv-based holding company, which has stakes in Israel’s cellular provider Cellcom Israel Ltd. and supermarket chain operator Shufersal Ltd., climbed as much as 16 percent before settling at 7.1 percent, the most since Feb. 11, at the close of trading in Tel Aviv. The yield on its 4.95 percent bond due Dec. 2025 dropped 50 basis points, the most since April 7.
The company said Sunday its board of directors had approved an investment by Elsztain’s Dolphin Netherlands BV of 150 million shekels ($39 million) that Elsztain made conditional on being appointed sole chairman. Today’s gains pare the company’s share decline to 23 percent this year amid a power struggle between Elsztain and co-chairman Moti Ben Moshe for control of the company.
Tal Rabina, a spokesman for Moti Ben Moshe, said his representative had written to the board describing the decision as “illegal” and a violation of the existing agreement between the two men. A spokeswoman for Elsztain declined to comment.
“The marriage between Elsztain and Ben Moshe was troubled and now it is undergoing a very difficult divorce,” Saar Golan, a trader at Tel Aviv-based Bank of Jerusalem Ltd., said by phone on Sunday. “It’s easier to make decisions with just one person in charge.”
Ben Moshe and Elsztain last year wrested control of IDB from Israeli businessman Nochi Dankner after a local court ruling cleared the way for the joint owners to restructure the company’s 2 billion shekels of debt. In February, Elsztain became the sole controlling holder after the he bought 391.5 million shekels of stock in a rights offering.